03/10/2015 03:00 PM House HEALTH & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| HB59 | |
| Discussion: Medicaid Expansion | |
| HB59 | |
| HB40 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 59 | TELECONFERENCED | |
| *+ | HB 40 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE
March 10, 2015
3:05 p.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Liz Vazquez, Vice Chair
Representative Neal Foster
Representative Louise Stutes
Representative David Talerico
Representative Geran Tarr
Representative Adam Wool
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 59
"An Act relating to marijuana concentrates; and providing for an
effective date."
- MOVED CSHB 59(HSS) OUT OF COMMITTEE
DISCUSSION: MEDICAID EXPANSION
- HEARD
HOUSE BILL NO. 40
"An Act relating to the use of electronic cigarettes; and
providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 59
SHORT TITLE: MARIJUANA CONCENTRATES; LICENSES
SPONSOR(s): REPRESENTATIVE(s) SEATON
01/21/15 (H) PREFILE RELEASED 1/16/15
01/21/15 (H) READ THE FIRST TIME - REFERRALS
01/21/15 (H) HSS, JUD
02/03/15 (H) HSS AT 3:00 PM CAPITOL 106
02/03/15 (H) Heard & Held
02/03/15 (H) MINUTE(HSS)
02/26/15 (H) HSS AT 3:00 PM CAPITOL 106
02/26/15 (H) Heard & Held
02/26/15 (H) MINUTE(HSS)
03/10/15 (H) HSS AT 3:00 PM CAPITOL 106
BILL: HB 40
SHORT TITLE: USE OF ELECTRONIC CIGARETTES AS SMOKING
SPONSOR(s): REPRESENTATIVE(s) HERRON
01/21/15 (H) PREFILE RELEASED 1/9/15
01/21/15 (H) READ THE FIRST TIME - REFERRALS
01/21/15 (H) HSS, JUD
03/10/15 (H) HSS AT 3:00 PM CAPITOL 106
WITNESS REGISTER
VALERIE DAVIDSON, Commissioner Designee
Office of the Commissioner
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Answered questions previously posed to the
Department of Health and Social Services by the committee.
JON SHERWOOD, Deputy Commissioner
Medicaid and Health Care Policy
Office of the Commissioner
Department of Health and Social Services
Juneau, Alaska
POSITION STATEMENT: Answered questions during the DHSS response
to questions previously posed by the committee.
MARGARET BRODIE, Director
Director's Office
Division of Health Care Services
Department of Health and Social Services
Juneau, Alaska
POSITION STATEMENT: Answered questions during the DHSS response
to questions previously posed by the committee.
JARED KOSIN, Executive Director
Rate Review
Division of Health Care Services
Department of Health and Social Services
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the DHSS response
to questions previously posed by the committee.
MONIQUE MARTIN, Health Care Policy Advisor
Office of the Commissioner
Department of Health and Social Services
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the DHSS response
to questions previously posed by the committee.
ALBERT WALL, Director
Central Office
Division of Behavioral Health
Department of Health and Social Services
Juneau, Alaska
POSITION STATEMENT: Answered questions during the DHSS response
to questions previously posed by the committee.
REPRESENTATIVE BOB HERRON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 40 as the sponsor of the bill.
ROB EARL, Staff
Representative Bob Herron
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Explained the changes to HB 40 on behalf of
the bill sponsor, Representative Herron.
EMILY NENON, Alaska Government Relations Director
American Cancer Society Cancer Action Network
Anchorage, Alaska
POSITION STATEMENT: Testified during discussion of HB 40.
CHAR DAY
Americans for Non-Smokers' Rights (ANR)
Berkeley, California
POSITION STATEMENT: Testified in support of HB 40.
ACTION NARRATIVE
3:05:45 PM
CHAIR PAUL SEATON called the House Health and Social Services
Standing Committee meeting to order at 3:05 p.m.
Representatives Seaton, Foster, Tarr, Wool, Talerico, Stutes,
and Vazquez were present at the call to order.
HB 59-MARIJUANA CONCENTRATES; LICENSES
3:06:12 PM
CHAIR SEATON announced that the first order of business would be
HOUSE BILL NO. 59, "An Act relating to marijuana concentrates;
and providing for an effective date."
3:08:13 PM
REPRESENTATIVE VAZQUEZ moved to adopt the proposed committee
substitute (CS) for HB 59, labeled 29-LS0257\F, Martin, 2/28/15,
as the working draft. There being no objection, it was so
ordered.
3:08:44 PM
REPRESENTATIVE VAZQUEZ moved to report CSHB 59, Version 29-
LS0257\F, Martin, 2/28/15, out of committee with individual
recommendations and the accompanying fiscal notes.
REPRESENTATIVE WOOL objected for the purpose of discussion. He
stated that he was a license holder under AS 4, and, as portions
of the proposed bill dealt with license holders, he opined that
it was more appropriate for some of the stipulations and issues
to be worked out by the regulatory board.
3:09:44 PM
REPRESENTATIVE WOOL maintained his objection.
A roll call vote was taken. Representatives Foster, Vazquez,
Talerico, and Seaton voted in favor of CSHB 59. Representatives
Tarr, Wool, and Stutes voted against it. Therefore, CSHB
59(HSS) was reported out of the House Health and Social Services
Standing Committee by a vote of 4 yeas - 3 nays.
[Further discussion of HB 59 occurred later in this meeting.]
^Discussion: Medicaid Expansion
Discussion: Medicaid Expansion
3:11:03 PM
CHAIR SEATON announced that the next order of business would be
a response by the Department of Health and Social Services to
the previously asked questions on Medicaid Expansion.
VALERIE DAVIDSON, Commissioner Designee, Office of the
Commissioner, Department of Health and Social Services (DHSS),
said that the Healthy Alaska plan, previously introduced to the
committee, and Medicaid Expansion both offered benefits,
improved the health of Alaskans and the economy of Alaska, and
saved general fund dollars. She declared that this was "a
really good investment for Alaska" as it infused a significant
amount of federal funds into the Alaska economy at a time when
the economy could use the boost.
CHAIR SEATON directed attention to the graph, titled "All
Medicaid Direct Services Beneficiaries and Expenditures"
[Included in members' packets].
3:13:05 PM
REPRESENTATIVE TARR asked for a comparison to the number of the
beneficiaries as a percentage of population in other states.
She questioned if Alaska was "on par" and had similar
percentages.
COMMISSIONER DAVIDSON offered her belief that Alaska did have
similar percentages, but stated that she would provide the
accurate information.
3:13:50 PM
REPRESENTATIVE VAZQUEZ said that she could not address the
obvious inconsistencies with such short notice, offering an
example for the stated enrollment of approximately 140,000
enrollees, even though the information that she had researched
in her personal conversations indicated that there were 165,000
enrollees. She reported that the Centers for Medicare and
Medicaid Services (CMS) had stated that enrollment was 124,000.
She asked which figure was correct. She said that there would
be other inconsistencies and that she was not prepared to
address all the issues given this short notice.
CHAIR SEATON reminded her that this was a short follow up and a
short response to get all the information, and that the
committee was not moving the bill out of committee today. He
suggested that specific questions could be presented and that a
work session, while sitting around a table and not on opposite
sides of table, could be conducted. He declared that it was
necessary to put the questions on the table, in order to address
them in the future.
3:16:33 PM
REPRESENTATIVE VAZQUEZ said that she would prefer to move on and
discuss the discrepancies at a later time.
CHAIR SEATON explained that these were responses to the
questions submitted after the previous committee meeting. He
declared his desire to ensure that every member of the committee
had the time to analyze these responses, and that any
qualitative responses from the department could be placed on the
record.
3:17:24 PM
JON SHERWOOD, Deputy Commissioner, Medicaid and Health Care
Policy, Office of the Commissioner, Department of Health and
Social Services, in response to Representative Vazquez, directed
attention to the truncated footnote at the bottom of the table,
and offered to follow up for the specific details to which
number was used for Medicaid enrollees. He explained that
different reports generated different numbers, as some were
average monthly enrollment, and others were quarterly or annual
unduplicated numbers. He offered to provide the source of this
figure to the committee.
CHAIR SEATON said that he was unaware of the various sets of
numbers, and that the committee would wait for the information.
REPRESENTATIVE WOOL pointed to the decline for the Medicaid
numbers in 2014, and asked if this was related to the
implementation of the Patient Protection and Affordable Care
Act.
MR. SHERWOOD replied that the expenditure numbers very likely
reflected conversion into the new Enterprise Medicaid Management
Information System (MMIS). He said that there was some
possibility that the change in beneficiaries reflected the
required change in income methodology, MAGI (Modified Adjusted
Gross Income), a result of the Patient Protection and Affordable
Care Act. He explained that MAGI impacted the way income for
certain children, parents, caretaker relatives, and pregnant
women was calculated. He shared that the department was not yet
comfortable with a definitive explanation to the beneficiary
changes.
3:20:11 PM
COMMISSIONER DAVIDSON added that the Patient Protection and
Affordable Care Act had changed the ways of qualification for
Medicaid, subsequently making it easier. As asset testing was
no longer used, it was now only based on modified adjusted gross
income, which she referred to as "the welcome mat effect."
CHAIR SEATON asked in which year on the chart this had come into
effect.
MR. SHERWOOD explained that the change for benefits took effect
on January 1, 2014, and that a provision for a three month
transition did not allow a case to be closed as a result of the
application of the new rules. He noted that some children had
been extended for another year if the changes had a negative
impact. He allowed that in most circumstances the changes were
favorable, although there could be a negative impact when it
required the accounting of income from step parents when
everyone was part of the same tax filing. He noted that
previously the department had been prohibited from including
step parent income.
CHAIR SEATON asked that an explanation for the decline in
numbers be presented.
3:22:14 PM
REPRESENTATIVE TARR asked if January 1, 2014 had been the
effective date for both the Patient Protection and Affordable
Care Act and Medicaid Expansion, in order to make it easier for
qualification and enrollment.
COMMISSIONER DAVIDSON replied "yes." She relayed that under the
original law, Medicaid Expansion was mandatory for states. She
noted that the decision by the U. S. Supreme Court allowing
states to opt out of Medicaid Expansion had created a "new donut
hole" in Medicaid, as individuals who earned less than 100
percent of the federal poverty level were now not eligible for
subsidies on the federally facilitated market place.
3:23:38 PM
REPRESENTATIVE VAZQUEZ directed attention to the total funds for
2014, at the bottom of the spread sheet titled "Medicaid
Expenditures by Fund Source," [Included in members' packets]
which totaled $1,326,503,000. She stated that other budgetary
documentation in the Legislature indicated that this would be
closer to $1.7 billion. She asked about the discrepancy.
3:24:44 PM
MARGARET BRODIE, Director, Director's Office, Division of Health
Care Services, Department of Health and Social Services, asked
for clarification to the question.
REPRESENTATIVE VAZQUEZ stated that she had documentation
elsewhere that indicated the 2014 expenditure was closer to $1.7
billion.
MS. BRODIE replied that, although the Medicaid projection for
2014 had been close to $1.6 billion, this chart was for the
actual expenditure. She reported that DHSS had tightened down
on the waiver programs through the reassessments, resulting in a
lot of cost savings.
3:26:47 PM
REPRESENTATIVE TARR asked if the Medicaid reform efforts to this
point had already resulted in $300 million in savings.
MS. BRODIE replied that the savings might not be that high, as
half had been in cost savings, whereas the other half was
because the system had yet not paid disputed claims.
REPRESENTATIVE VAZQUEZ asked about the difficulties with MMIS,
and whether this had resulted in non-payment for claims which
were customarily paid.
MS. BRODIE expressed her agreement, but pointed out that
currently there had been correct payment for over 95 percent of
the claims.
REPRESENTATIVE VAZQUEZ asked if claims were still being paid
with paper checks.
MS. BRODIE replied that DHSS paid both electronically and with
paper checks.
REPRESENTATIVE VAZQUEZ asked for the breakdown.
MS. BRODIE replied that she would research that.
3:28:36 PM
COMMISSIONER DAVIDSON asked to elaborate on a point previously
made by Ms. Brodie. She reported that, when MMIS was delayed,
Ms. Brodie and her team "worked really hard with providers to be
able to get advance payments paid," to enable some revenue to
many providers, a process she had negotiated with CMS to allow
providers "to keep their doors open." She pointed out that,
although the department had CMS approval to book those figures,
a later determination had been made by the Division of
Legislative Audit that those figures had not been claimed
through the MMIS system, and consequently needed to be set aside
and moved forward to 2015. She opined that some of that could
be reflected in this spreadsheet. She relayed that, although
the department had been very careful to have clearance for these
advance payments from CMS, the Division of Legislative Audit had
required that the payment claims be booked in 2015.
3:30:58 PM
CHAIR SEATON expressed his appreciation for the Department of
Health and Social Services efforts to make those advance
payments, as it otherwise could have created accounting
nightmares for years.
CHAIR SEATON directed attention to the second question, "Please
provide the numbers for Medicaid expansion at full enrollment."
[Included in members' packets] He explained that this should
include everyone who was eligible for Medicaid, and he read from
the attached table dated July 1, 2015: Newly Eligible Adults,
41,910; Spending Per Enrollee, $7,248; Federal Participation
Rate, 100 percent; Federal Spending, $303,763,680; State
Spending, $1,460,650; Offsets to State Spending from CAMA,
Department of Corrections, and Behavioral Health Grants,
(6,100,000); and Savings to State, ($4,639,350).
3:33:38 PM
REPRESENTATIVE VAZQUEZ directed attention to the aforementioned
table on page 2, and asked about the offsets to state spending,
questioning why the woodwork effect, discussed in the Lewin
Group report, had not been taken into account.
COMMISSIONER DAVIDSON replied that her original DHSS
presentation on Medicaid Expansion had mentioned the Lewin
Report, as well as the Urban Institute report, which she
referred to, affectionately, as "dueling banjo reports." She
stated that, as they were both dated and conducted by firms
which did not have a lot of experience with Alaska, DHSS had
asked Evergreen Economics to analyze the Medicaid data. She
pointed out that Evergreen Economics had a long history
analyzing Medicaid data for DHSS. She stated that the woodwork
effect reflected people who had already signed up for Medicaid.
3:35:55 PM
REPRESENTATIVE VAZQUEZ said that the Lewin report suggested a
substantial effect from the woodwork effect, and as these people
were already eligible, they would only have a 50 percent federal
match. She stated that this report came out in April, 2013,
whereas the Evergreen report came out in February, 2015, and
that there were dramatic differences between the two reports.
She stated that she had tables that she would share with
everyone, and that her research indicated that there would be an
effect and an additional expense to the state from this woodwork
effect.
COMMISSIONER DAVIDSON replied that it depended on how this was
categorized. She stated that the impact from expanded Medicaid
coverage would not include the people on woodwork, as they were
already eligible for the regular Medicaid program, hence there
would not be an additional expense due to expansion.
REPRESENTATIVE VAZQUEZ said that this would still be an added
cost to the state. She stated that there were also people who
would drop private insurance or drop income in order to qualify
for Medicaid.
CHAIR SEATON pointed out that this was not included in the
second question regarding the cost effect for people newly
eligible for Medicaid expansion. He stated that he did not want
to mix apples and oranges. He asked that Commissioner Davidson
also provide some estimates for this data under the Healthy
Alaska plan, as well as an estimate if all the newly eligible
enrolled, so that both columns could be included in a review of
the parameters.
3:39:42 PM
REPRESENTATIVE VAZQUEZ, directing attention to the table with
question 2, said that there should be a second column for
estimated enrollment as there would not necessarily be 100
percent enrollment of newly eligible adults.
COMMISSIONER DAVIDSON replied that, as she had indicated in her
prior presentation, the department anticipated about 63 percent
of the eligible would enroll. She pointed out that the
committee had asked for a table reflecting enrollment for 100
percent of those eligible under Medicaid Expansion.
CHAIR SEATON expressed his agreement, noting the annual
increases reported in the Healthy Alaska plan.
3:41:34 PM
REPRESENTATIVE TARR asked about the spending per enrollee,
noting the possibility of a "pent up need" for services by
people who had not previously had access to health care,
resulting in higher costs. She asked if the average cost per
enrollee would go down over time.
COMMISSIONER DAVIDSON replied that Evergreen Economics had
looked at the cost per enrollee and found that it was much
smaller than a prior report by the Lewin Group to the State of
Alaska. She explained that the eligible population for
expansion were 54 percent male, with 20 percent of those men
between ages 19 - 34. She reported that, although the cost per
enrollee for this group had historically only grown 1 percent
annually, the current estimate for 2016 had been increased to
account for the initial pent up demand by those now having
access to care and trying to get caught up with care. She
pointed out that this projected cost per enrollee would also
address the fact that Medicaid Expansion would cover some of the
generally higher cost CAMA (Chronic and Acute Medical
Assistance) beneficiaries, the cost for which was currently 100
percent covered by the general fund. She reported that the cost
per enrollee would be about $7248 in 2016, increasing to about
$8433 in 2021.
REPRESENTATIVE VAZQUEZ noted an inconsistency for the projected
$6 million in administrative costs in FY 2016 on Table 2
[Included in members' packets] as the Lewin Report had estimated
that cost to be about $11 million.
CHAIR SEATON acknowledged that different reports had different
cost estimates. He asked if there had been any further research
to other states, beyond the Healthy Alaska plan, on whether the
projected 63 percent for new enrollees was "pretty well on
track." He questioned if the projection in the Healthy Alaska
plan was the current estimate.
COMMISSIONER DAVIDSON replied that this was the current
estimate.
3:47:33 PM
REPRESENTATIVE VAZQUEZ referenced the March 5 presentation
[Healthy Alaska Plan] to the committee by Commissioner Davidson,
slide 14, and said that the projected administrative cost in
that report had been zero, which was quite different than the $6
million estimate.
COMMISSIONER DAVIDSON pointed to the asterisk next to the
administrative cost in the Healthy Alaska plan, stating that the
administrative cost for the first year was being funded by the
Alaska Mental Health Trust Authority.
REPRESENTATIVE VAZQUEZ asked if that estimated amount had been
about $1.5 million.
MR. SHERWOOD pointed out that this referenced the general fund
savings. He explained that the total administrative
expenditure, which would serve 20,000 Alaskans in the first
year, in the Healthy Alaska plan would have been about $3
million, half of which was federally funded, with the remainder
of the state share paid by the Alaska Mental Health Trust
Authority funds. He noted that this would result in a zero cost
to the general fund, even though there was a federal fund
expenditure. He added that service for a projected 41,000
Alaskans in FY 2016 would increase the estimated administrative
expenses.
COMMISSIONER DAVIDSON pointed out that 50 percent of the
administrative costs were reimbursed by the federal government.
CHAIR SEATON reviewed that the $1.5 million of the cost from
general fund would be covered by the Alaska Mental Trust
Authority in FY 2016, with the remaining $1.5 million being
covered by federal funds, for a total of $3 million in
administrative costs.
REPRESENTATIVE VAZQUEZ said that the Lewin Group had reported a
cost of $11,204,000 as the cost to the state, with an additional
cost to the federal government. She stated that there was still
a discrepancy between the initial estimate by DHSS and this
report.
COMMISSIONER DAVIDSON expressed agreement.
REPRESENTATIVE TARR asked for any characterization of
differences since the activation of Medicaid Expansion on
January 1, 2014 between the Lewin report and the Evergreen
report, as there was now some data for comparison.
COMMISSIONER DAVIDSON replied that an unfortunate result from
the decision by the State of Alaska to not expand Medicaid in
the first year was that many Alaskans now do not have any health
coverage when there could have been improvement to their health
care while the state received federal funding. She relayed that
a benefit of this delay had been the opportunity to look at the
experience of other states in 2014 for reform of their Medicaid
programs, thus providing more information to compare with
Alaska's experience for Medicaid trends.
CHAIR SEATON expressed the need to recognize that there were two
different reports covering two different time periods with
different analyses. He stated that the committee would need to
"figure out what numbers make the most sense." He pointed out
that the Healthy Alaska plan from DHSS was its synopsis of the
different reports with the most reasonable assumptions going
forward. He allowed that it was not necessary that the
committee agree with that plan, but rather that the committee
decide which report to use most critically, and then decide
whether DHSS had done an adequate job with its analyses of the
different reports for its Healthy Alaska plan. He stated that
the committee was not chastising but was working to understand
the difference between each of these reports and the resulting
numbers.
3:54:53 PM
REPRESENTATIVE TARR asked about the expected enrollment from
Medicaid Expansion, noting that fewer enrollees could mean a
significant reduction of spending by the state.
MR. SHERWOOD replied that the aforementioned presentation on the
Healthy Alaska plan showed that state expenditures in FY16 at
the regular rate would be zero, and that, in addition, there
would be offsets to other programs resulting in a net general
fund reduction. He expressed agreement that, although full
enrollment without additional funding from the Alaska Mental
Health Trust Authority would incur state expenses of
approximately $1.4 million, there would be substantial net
reductions in general funds in excess of $4 million with the
offsets.
3:56:32 PM
CHAIR SEATON moved on to question number 3, "Please provide the
incomes of the hospitals that reported the $90 million in
uncompensated care," and he directed attention to the handout
and table of the same title in response to this question
[Included in members' packets]. He summarized that Medicaid
Expansion would attempt a reduction in that care with fully
compensated care.
MR. SHERWOOD stated that the Office of Rate Review had supplied
the information on the included table, noting that the net
income listed included all sources of revenue, including one
time payments, against expenses as opposed to operating revenue.
He offered an example of capital appropriations in the revenue,
and reported that this net income did not inherently represent
profit, as a case by case analysis of each facility would be
necessary.
CHAIR SEATON noted that grants appeared as net income, although
it was only the facility receiving a capital grant. He added
that bond issues could also be represented as net income.
3:59:32 PM
REPRESENTATIVE TALERICO offered his belief that it would be
important to have a discussion for this $91 million in
uncompensated care by the non-tribal facilities. He questioned
whether it was possible to use these net income numbers to
figure this out.
CHAIR SEATON expressed his agreement that the capital projects
did make it difficult, and said that he was unsure if there was
a way to get to the requested information.
4:01:36 PM
REPRESENTATIVE TARR directed attention to the listing on the
aforementioned table for Providence Alaska Medical Center, with
a net income of about $88 million, and asked about the
corresponding 13 percent of revenue.
4:02:17 PM
JARED KOSIN, Executive Director, Rate Review, Division of Health
Care Services, Department of Health and Social Services,
explained that after they take total revenue and deduct total
expenses, the remaining net income reflected the corresponding
percentage, listed on the same line, of total revenue.
REPRESENTATIVE TARR asked how the amount of uncompensated care
would be applied to the listed information for each facility.
She asked if it had already been figured as an expense, or would
it be subtracted from the listed net income.
MR. KOSIN replied that uncompensated care costs were considered
in the total expenses that had been deducted to arrive at the
net income. He said that the only way hospitals could be
reimbursed for uncompensated care by the state was through the
disproportionate share of hospital payments, which was
distributed through the federal government as a part of the
Patient Protection and Affordable Care Act, and this money was
being phased out over the upcoming seven to ten years. He
stated that it was considered in the reported expenses for total
net income, but was reimbursed through a separate revenue
stream, and not through Medicaid.
CHAIR SEATON asked if that separate revenue stream to the
hospital was part of its net income.
MR. KOSIN replied that it was.
REPRESENTATIVE TARR asked if there was an industry standard that
the net income should be above a specific percentage of the
total revenue.
MR. KOSIN explained that the staff accountants in his office had
cautioned that this global scale for total net income did not
allow for any way to draw the conclusions that financial health
could be assessed based on any percentage. He stated that it
was necessary to draw down on each individual revenue stream and
each individual expense on each line in order to determine
whether there was a healthy margin. He reported that with this
information this analysis would be inconclusive.
REPRESENTATIVE VAZQUEZ asked if he had any determination for the
disproportionate share hospital payments.
MR. KOSIN replied that the federal government determined the
aggregate amount of money allowed for disproportionate share
hospital payments, and then regulations specified how the funds
were to be distributed. He said that his office did figure
facility specific limits for each hospital that reported
uncompensated care, and then determined the relevant caps to
payments for each of these hospitals.
CHAIR SEATON asked for a broad explanation of disproportionate
care payment.
MR. KOSIN explained that these disproportionate share hospital
payments were designed to help hospitals serving a
disproportionate share of uncompensated care patients. He
stated that, as patients with no payer source were still treated
even though there was not any reimbursement for those costs, the
federal government had created a means to help offset those
costs by annually publishing a state by state aggregate amount
they would fund. From this fund, each state could draw down at
a 50:50 match to distribute payments to identified hospitals in
order to offset the uncompensated care. He pointed out that the
Patient Protection and Affordable Care Act, since Medicaid
Expansion was originally mandatory, had made this program
irrelevant; however, when Medicaid Expansion was ruled not
mandatory, the reductions in Disproportionate Share Hospital
payments were delayed and are supposed to start this year.
4:08:18 PM
REPRESENTATIVE VAZQUEZ asked if uncompensated hospital care was
considered in the cost reports submitted to his office.
MR. KOSIN replied that uncompensated care was not considered for
the reimbursement calculation, although it was reported in the
cost report. He clarified that it was not in the Medicaid
reimbursement for hospitals, and it was not compensated.
REPRESENTATIVE VAZQUEZ asked why it was reported.
MR. KOSIN replied that the Medicare cost report was a very
thorough report in mechanism, as Medicare took a look at all the
financials for a hospital, including the requirement to submit
its annual audit. He stated that DHSS required that the same
data, along with some additional financial information, be
submitted for Medicaid calculations. He reported that these
reports allowed the department to isolate allowable costs, and
then reimburse for those costs.
REPRESENTATIVE VAZQUEZ asked about the difference between
Medicare and Medicaid, and which program his office handled.
MR. KOSIN spoke about the reimbursement programs for both
Medicaid and Medicare. He said that Medicaid served a different
population as it was state based, and Medicare was a federal
program. He said that with Medicaid, states had the authority
to set the way to reimburse for Medicaid services; however, as
Medicare covered the same or similar services, dependent on the
population, the Medicaid programs would mirror those payment
methodologies and would adjust them based on the state. He
stated that the Office of Rate Review and the State of Alaska
were Medicaid.
MR. SHERWOOD, in response to Representative Vazquez, stated that
Medicare was a federal program providing health coverage for
individuals over 65 years of age, and for individuals with
disabilities. He said that it was more closely modeled to
conventional insurance, as it was paid into through employer
withheld taxes, was administered directly by the federal
government, and provided a wide range of primary and acute care
services, although it did not provide substantial long term care
services. He reported that it was not based on assets or
income, as the criteria was only for age or disability, and for
the required payment participation. He explained that most
people qualified for hospital coverage, Part A, without
premiums, and that almost everyone paid for Medicare Part B, the
outpatient, primary care. He noted that there was also
prescription drug coverage, Part D. He explained that Medicare
Advantage was for the managed care program, Part C. He declared
that it was not a needs based program and the policies were made
at the federal level.
MR. SHERWOOD said that Medicaid was a needs based program for
individuals with low incomes, and, in some categories, asset
tests did apply. He stated that it had historically been
dependent on certain categorical requirements, including aged,
blind, disabled, pregnant women, and children. He said that
childless adults between the ages of 21 - 64, who were not
parents or care taker relatives, did not have a substantial
disability, and were not pregnant, did not qualify regardless of
income. He explained that it was a state administered program,
under federal rules, although states had certain options for
what they could offer, how they administer their program, and
who they can cover. He noted that the state worked in
partnership with the federal government. He reported that
states paid a share of the costs of Medicaid. He allowed that
some people, including the aged, and those with disabilities,
low incomes and few assets, were dually eligible for both
programs.
4:15:33 PM
REPRESENTATIVE VAZQUEZ summarized that Medicare was for the
elderly, over 65 years of age, and the disabled and that
Medicaid was for individuals with certain disabilities, long
term care, and low income.
COMMISSIONER DAVIDSON said that asset testing was still in place
for people receiving certain long term care services.
REPRESENTATIVE VAZQUEZ asked whether this was no longer relevant
as of the last year.
MR. SHERWOOD explained that assets for children, pregnant women,
and parents or care taker relatives were not subject to an asset
test. He said that older Alaskans and individuals who qualified
through disabilities were subject to asset tests.
REPRESENTATIVE VAZQUEZ asked for clarification that the TEFRA
(Tax Equity and Fiscal Responsibility Act) program did not have
any asset tests, as the child was considered as a single
household.
MR. SHERWOOD replied that TEFRA did have an asset test, although
it only pertained to the child's assets and not to the parent's
assets. He explained that for qualification, the child must
meet an institutional level of care, and if the child was in an
institution, the parent's assets were not counted.
MR. SHERWOOD, in response to Representative Tarr, clarified that
TEFRA, the Tax Equity and Fiscal Responsibility Act, was a broad
legislation which included the option for states to cover
individuals.
4:18:10 PM
REPRESENTATIVE WOOL referenced the aforementioned question 3
regarding the $90 million in uncompensated care. He asked
whether this question stemmed from the amount each hospital paid
in uncompensated care, and what percentage that was of its net
income. He opined that this information was not included on the
table.
MR. SHERWOOD expressed agreement that the table did not have any
information for uncompensated care.
REPRESENTATIVE WOOL surmised that hospitals were in favor of
Medicaid Expansion as it would reduce uncompensated care.
COMMISSIONER DAVIDSON expressed her agreement.
REPRESENTATIVE WOOL asked if uncompensated care received any
reimbursement from the federal government.
COMMISSIONER DAVIDSON asked whether he was referencing the
disproportionate share payments, and she explained that, as
initially the Patient Protection and Affordable Care Act had
included mandatory Medicaid Expansion, it was planned to phase
out the disproportionate share payments over time as a way to
help fund the expansion. When the mandatory Medicaid Expansion
provision was disallowed by the U. S. Supreme Court, many
hospitals across the country took "the requisite hits to be able
to pay for the increases and resources that would come with
Medicaid Expansion, but Medicaid Expansion was off the table in
terms of being a mandatory service."
4:22:11 PM
MR. KOSIN explained that disproportionate share hospital
payments were partly funded by the federal government, with the
remaining 50 percent funded by the state. He pointed out that
these can "get complicated very quickly," as they appear to be
designed to reimburse for uncompensated care, although the
payments are structured so that only certain services were
eligible. As the majority of the eligible services were
behavioral health services, the predominant amount of funds went
to the Alaska Psychiatric Institute, as it was the only
institution for mental disease in the state. He pointed out
that the state had to pay half of the payment in order to
receive the federal match, so that drawing down these funds was
not a given and could not be counted on while determining the
budget. He reported that only two or three other hospitals in
Alaska received any of this funding, as it was for behavioral
health services. He shared that, "at best, it only offsets a
little uncompensated care and per the Affordable Care Act, it's
set to phase out anyways over the next seven to ten years."
4:24:21 PM
REPRESENTATIVE WOOL reflected that, as Medicaid eligibility was
based on income, not assets, it had been suggested that people
would choose to lower their income intentionally to be on
Medicaid. He opined that, if people had any experience with
receiving care through the Medicaid system, this would not be a
choice for anyone with a lot of assets. He asked if the Patient
Protection and Affordable Care Act subsidy structure was also
based on assets.
COMMISSIONER DAVIDSON explained that, under the Patient
Protection and Affordable Care Act, to qualify, in Alaska this
was a federally facilitated market place, individuals were only
eligible for these market place subsidies if they had income
between 100 percent and 400 percent of the federal poverty
level. She stated that anyone with income less than 100 percent
of the federal poverty level was not eligible for a subsidy on
the market place. She relayed that Medicaid Expansion would
cover individuals with incomes up to 138 percent of the federal
poverty level.
REPRESENTATIVE WOOL asked if there was an overlap for
individuals with incomes between 100 percent and 138 percent [of
the federal poverty level] for eligibility from either Medicaid
or subsidies from the Patient Protection and Affordable Care
Act.
MR. SHERWOOD offered his belief that, as the process was based
on income, an individual with income in this range would be
directed to Medicaid in a state that had accepted Medicaid
Expansion, or to the [market place] exchange dependent on their
income. He explained that the subsidy from the exchange could
be accepted down to 100 percent [of the federal poverty level.]
4:28:18 PM
MONIQUE MARTIN, Health Care Policy Advisor, Office of the
Commissioner, Department of Health and Social Services,
explained that an individual with an income less than 138
percent of the federal poverty level residing in a state which
had expanded Medicaid coverage would receive a determination or
an assessment suggesting the person was eligible for Medicaid
and that this information would then be transmitted to the
state. If a person was determined eligible for minimum
essential coverage under the Patient Protection and Affordable
Care Act, they would not be able to sign up for a subsidy and
would only be eligible for Medicaid.
4:30:10 PM
REPRESENTATIVE TALERICO asked about other categories in
accounting, such as operating income, which could include non-
operating expenses. He suggested that any other accounting
information would be good to share with the committee.
CHAIR SEATON suggested that he discuss this with the department
and determine whether the information was meaningful within this
context.
REPRESENTATIVE TALERICO expressed his agreement.
CHAIR SEATON reiterated that any member of the committee could
directly contact the department through the legislative liaison.
4:32:05 PM
CHAIR SEATON moved on to question 5, "Please provide information
on how Medicaid and Medicaid expansion might help with
behavioral health medicine compliance issues." [Included in
members' packets] In response to Representative Tarr, he stated
that he would temporarily bypass question 4, in order to discuss
expansion before moving on to reforms.
REPRESENTATIVE TARR asked about the unintended consequences to
behavioral health and mental health from stopping medication,
noting that there could be correctional issues, as well.
CHAIR SEATON paraphrased from the second bullet point in
question 5, which read:
for individuals transitioning from hospital care or
releases from correctional facilities, because
individuals leaving these facilities will not only
have prescriptions in hand for their medications but
also the coverage to pay for them as long as they are
medically necessary.
CHAIR SEATON opined that the key point to her question was that
Medicaid Expansion would provide this to those populations.
4:35:04 PM
COMMISSIONER DAVIDSON, in response to Representative Tarr, said
that there were definite benefits in a variety of settings, as
experience had shown that continuity of care, assurance for the
right care, at the right time, in the right place, including
medications, would also help individuals to continue to
contribute to a healthy, productive lifestyle. She expressed
agreement that this could also lead to opportunities to reduce
recidivism, offering Texas as an example for investment in
health instead of prisons. She reported that the offering of a
variety of behavioral health and treatment services was one of
the biggest opportunities to change the dynamic of recidivism.
She pointed out that a high percentage of the prison population,
as they were there awaiting trial and not because they had been
convicted, could be, instead, placed in treatment programs paid
for through Medicaid Expansion.
REPRESENTATIVE TARR stated that, as the Department of
Corrections was the largest mental health care provider [in
Alaska], it would be better to have care for an individual prior
to their criminal behavior.
COMMISSIONER DAVIDSON added that, in addition to treatment
facilities being better than incarceration in the prisons, it
was necessary to have continuity of care for medications and
follow up behavioral health services for an individual upon
return to their community. She pointed out that these community
health provider programs after release from incarceration
already existed in other states.
4:39:52 PM
ALBERT WALL, Director, Central Office, Division of Behavioral
Health, Department of Health and Social Services, reported that,
for the population with serious mental illness, the most
important thing for stability was access to consistent care,
with medication, on an ongoing basis. He declared that this
ongoing access was available through the Medicaid Expansion, and
would allow these people to rise to the greatest extent
possible.
REPRESENTATIVE WOOL expressed recognition for the potential
realized savings from Medicaid Expansion as medical treatment
outside the prison facility for prisoners would be covered by
Medicaid. He noted that, as mental health treatments would also
be covered through this expansion, it could potentially lower
the prison population. He asked if any of these calculations
for reduced recidivism or a reduction in the need for use of the
state corrections system had been put into the projected savings
for Medicaid expansion.
COMMISSIONER DAVIDSON replied that the only part of the cost
savings used in the projections was for the out of facility
overnight medical care, which she described as contract in-
patient care. She stated that it did not include the savings
from anti-recidivism efforts, behavioral health services, or
substance and alcohol abuse services. She declared that DHSS
did expect to realize those savings.
4:43:13 PM
CHAIR SEATON paraphrased question number 6 [Included in members'
packets], which read:
Representative Seaton would like to hear our opinion
on whether expansion legislation could include reform
requirements with a delayed implementation timeline to
provide a level of accountability and assurance to the
legislature.
CHAIR SEATON noted that there would also be discussion on the
response from DHSS on reform efforts. [Included in members'
packets] He offered his belief that there were two things that
did not meet in time: expansion that occurred when it was
expanded, and reforms that could take time to implement. He
offered an example of an HMO (health maintenance organization)
model that was not instantaneous, as it would entail a shift
from the current fee for service model. He asked if DHSS felt
that something could be done in legislation to move forward with
Medicaid Expansion while there were definite timelines for
itemized reforms to be accomplished.
COMMISSIONER DAVIDSON replied that a lot of the identified
reform efforts were "not things that you can flip a switch
with," or they would have taken place over previous
administrations. She declared that a lot of the reform efforts
took time. She stated that the current challenge was for
smaller budgets and smaller revenues. She noted that DHSS had
identified some reform efforts that had already been undertaken.
She declared that DHSS had already commenced working on a
timeline for reform efforts. She directed attention to the
handout titled "March 5, 2015 Meeting - Follow-up Questions"
[Included in members' packets] which she explained was a
document of the efforts for savings opportunities and timelines.
She offered her belief that DHSS was "happy to work with the
Legislature on reform ideas," and that DHSS had identified a
path forward to this end. She pointed out that savings had been
identified through the budget process, some of which were
included in the handout. She offered her belief that any
further delay to Medicaid Expansion was a missed opportunity for
taking advantage of the $145 million in federal funds in 2016,
which "would really go a long way to be able to improve the
health of Alaskans and quite frankly boost the economy of Alaska
for a considerable savings to our state general fund budget."
REPRESENTATIVE STUTES expressed her concern that reform efforts
would take time, as, otherwise, they would have occurred during
the past several administrations. She expressed her hope that
changes and reforms would not take many future administrations
for completion. She expressed her belief that it would be
difficult for reform adjustments and controlled spending when
the money was coming in, and that it was imperative that reform
go hand in hand [with expansion]. She declared that reform
needed to be as much of a priority as Medicaid Expansion, or it
would not be successful.
COMMISSIONER DAVIDSON expressed her agreement, noting that this
was a very different budget environment than in prior
administrations. She shared that the governor had expectations
for the department commissioners to review each departmental
budget and to plan for 25 percent reductions over the next
several years. She reported that DHSS had taken $76 million in
budget cuts from the House and it was rumored that the Senate
would make further cuts of $4 million. She relayed that reform
efforts with opportunities and timelines for savings were
already underway because "nobody is more incentivized to hold
ourselves accountable than we are. We recognize that Medicaid
is a significant portion of our department's budget, and if we
are going to cut our budget by 25 percent in the next four
years, and our biggest budget item is Medicaid, reform really is
our opportunity to be able to meet the governor's expectation."
4:50:29 PM
CHAIR SEATON referenced the aforementioned three pages which
itemized the reform efforts, stating that the purpose of
question 6 was to determine whether the administration was
willing to have delayed implementation, in statute, to assure
that there were variable time lines for reform.
4:51:36 PM
COMMISSIONER DAVIDSON, referencing the reform efforts handout,
noted that the underlined sections referred back to those
numbered slides in the original PowerPoint presentation to the
committee.
4:52:21 PM
REPRESENTATIVE WOOL offered an analogy to the injection of cash,
jobs, and the stimulation of the economy from the proposed F-35
fighter jets being stationed on a military base in Fairbanks,
although it was argued that the military was in need of reform
and the F-35 project needed more testing. He opined that all of
this could go on in parallel, even though the military was a
big, complex institution that most likely had waste. He
suggested that this was analogous to the discussion for Medicaid
Expansion.
COMMISSIONER DAVIDSON offered her belief that this was very
similar, noting that when the military had come to Alaska, it
had asked for various departments of the state government to
provide information for the benefits to military personnel from
Alaska. She reported that a lot of military personnel
qualified, because of income and children, for Medicaid, and
could potentially qualify under the expansion. She relayed
that, after the military had studied many states and
communities, they had reported back that the military population
in Alaska benefitted from a great partnership with the community
and the services it provided.
HB 59-MARIJUANA CONCENTRATES; LICENSES
4:56:18 PM
CHAIR SEATON, upon request from Representative Stutes, returned
the committee's attention to HB 59. In further response to
Representative Stutes, Chair Seaton confirmed that the next
committee of referral for HB 59 is the House Judiciary Standing
Committee.
REPRESENTATIVE STUTES moved to reconsider her vote on the motion
to report CSHB 59, Version 29-LS0257\F, Martin, 2/28/15, from
committee. She stated she wanted to change her vote from a nay
to a yea vote. There being no objection, Version F was before
the committee.
REPRESENTATIVE VAZQUEZ moved to report CSHB 59, Version 29-
LS0257\F, Martin, 2/28/15, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 59(HSS) was moved from the House Health and
Social Services Standing Committee.
HB 40-USE OF ELECTRONIC CIGARETTES AS SMOKING
4:58:01 PM
CHAIR SEATON announced that the final order of business would be
HOUSE BILL NO. 40, "An Act relating to the use of electronic
cigarettes; and providing for an effective date."
4:58:33 PM
REPRESENTATIVE BOB HERRON, Alaska State Legislature, relayed
that the genesis of the proposed bill was a result of e-
cigarette use in the Anchorage Airport. When he asked the
Department of Transportation & Public Facilities, he was told
there was not any policy, law, or regulation limiting the use of
electronic cigarettes. He stated that although he was not
against e-cigarette devices, the exhaled aerosol did contain
particulates. He asked that the use of these devices be limited
to those areas where cigars and cigarettes were currently
allowed.
5:00:23 PM
REPRESENTATIVE VAZQUEZ moved to adopt the proposed committee
substitute (CS) for HB 40, labeled 29-LS0232\W, Martin, 3/7/15,
as the working draft. There being no objection, it was so
ordered.
5:01:03 PM
ROB EARL, Staff, Representative Bob Herron, Alaska State
Legislature, explained that the committee substitute added "and
other oral smoking devices," on page 1, line 8, in order to
capture the next generation of vaporizers. The American Cancer
Society had made the suggestion to expand this definition. He
stated that the proposed bill expanded the definition of smoking
in AS 18 to include e-cigarettes, and the bill also defined
electronic cigarettes, lines 4 - 7. He reported that proposed
HB 40 would prohibit e-cigarette use statewide in any public
places where smoking tobacco was currently not allowed as
spelled out in AS 18.35.300, which included public
transportation vehicles, facilities, state office buildings,
other buildings operated by the state, nursing homes, etc. He
said that state law was currently a bit unclear whether e-
cigarette use would be prohibited in public places where tobacco
was currently banned because there was not a definition of
smoking in AS 18. The proposed bill would clarify that issue by
defining smoking to include e-cigarettes. He said that some
local Alaska jurisdictions had enacted comprehensive smoke free
workplace ordinances that included bans on smoking which
included e-cigarettes. He listed these communities to include
Nome, Juneau, Palmer, Haines Borough, Petersburg, and Skagway,
although the Anchorage law, passed in 2006, did not mention e-
cigarettes.
5:02:57 PM
CHAIR SEATON asked for clarification that the proposed bill was
for e-cigarettes to be banned from areas where cigarettes were
currently banned.
REPRESENTATIVE STUTES asked about the advice from the American
Cancer Society to equate these devices the same as tobacco.
MR. EARL explained that the American Cancer Society (ACS) had
helped expand the definition for smoking in the committee
substitute. He referenced slide 11 of the PowerPoint [Included
in members' packets], and clarified that proposed HB 40 did not
define e-cigarettes as a tobacco product, as there would then be
taxation and other implications.
REPRESENTATIVE STUTES, asking about the advice from ACS to treat
e-cigarettes similar to products containing tobacco, questioned
what substantiated that advice.
MR. EARL deferred to a representative from ACS.
5:05:36 PM
REPRESENTATIVE TARR asked if there was testimony available from
Legislative Legal Services.
CHAIR SEATON pointed out that the bill would be held over.
5:06:03 PM
EMILY NENON, Alaska Government Relations Director, American
Cancer Society Cancer Action Network, said that she would be
available at the next House Health and Social Services Standing
Committee meeting, and that she was available for any questions.
5:06:40 PM
CHAR DAY, Americans for Non-Smokers' Rights (ANR), explained
that the organization was a national member based group
committed to clear the air of second hand smoke, including "the
smoke that comes off of the end of an e-cigarette and out of the
breath of those who use e-cigarettes." She said the group was
also working to prevent another generation addicted to nicotine.
She encouraged support for HB 40, as it would prohibit the use
of e-cigarettes and other electronic smoking devices in places
that were required to be smoke free. She declared that ANR
supported prohibiting the use of electronic cigarettes in smoke
free environments at all times without exception. She offered
her belief that this was a worker health and safety issue, given
the growing body of science for what was in the second hand
aerosol, also known as vapor, emitted from an e-cigarette. She
allowed that, although there was not as much science on what was
in the second hand aerosol from an e-cigarette as tobacco
cigarettes, there was plenty to cause concern. She stated that
second hand aerosol contained volatile organic compounds, ultra-
fine particles, lead, chromium, nicotine, and other toxins. She
stated that legislators were choosing to not allow the use of
electronic smoking devices in smoke free environments so that
workers and patrons do not have to breathe the aerosol. She
relayed that there were currently at least 274 municipalities
and 3 states which had included e-cigarettes as items prohibited
from use in smoke free environments. She clarified that ANR was
not proposing an outright prohibition or ban on e-cigarettes,
but were only concerned with exposure to non-users from the
emitted aerosol. She stated that e-cigarettes should not be
used indoors or inside public places that would then pose a
health hazard to non-users. She pointed out that e-cigarettes
could be used to vape other substances, including hemp oil and
marijuana. She declared that there was a growing body of
science research which showed that the aerosol was a new source
of air pollution that contained ultra-fine particles with low
levels of toxins known to cause cancer, including benzene,
formaldehyde, and lead. She urged support of HB 40 to prohibit
the use of e-cigarettes and other electronic smoking devices in
places that are supposed to be smoke free.
REPRESENTATIVE STUTES noted that there was not a lot of history
or studies that it may potentially cause health issues, and she
asked for verifiable research that these were as hazardous to
health as cigarettes.
MS. DAY replied that there were new studies about e-cigarettes
being released monthly. She listed a recent study by the
American Society for Heating and Air Conditioning Regulations,
the standard setting body for indoor air, which had added e-
cigarettes to the list for things not to have in indoor air.
She noted that the World Health Organization had written a
background paper on e-cigarettes, which stated that people
exposed to e-cigarette vapor absorb nicotine, with one study
comparing this to the levels comparative to passive smokers.
She stated that a recently published environmental research
journal addressed the cotinine of non-smokers exposed to e-
cigarettes. She reiterated that new studies were published
monthly about the dangers of e-cigarettes.
CHAIR SEATON asked that copies of the studies be provided to the
committee.
5:12:44 PM
[HB 40 was held over]
5:12:52 PM
ADJOURNMENT
There being no further business before the committee, the House
Health and Social Services Standing Committee meeting was
adjourned at 5:12 p.m.